Sir Stelios Haji-Ioannou, founder of listed UK airline EasyJet and a serial investor, said yesterday that the airline industry has entered a period of lower growth due to rising fuel prices.
Speaking at the Ernst & Young World Entrepreneur of the Year event in Monaco, Stelios said Easy Jet, a FTSE 100 company, has had to "nudge" up fares in recent years to counter rising fuel costs and this dampens demand.
“My fear is that every year of putting the price up, can you keep growing the market? We kept saying the market grows because the prices kept coming down. If you put the price up the volume will go down.
“That’s why I’ve been advocating that the growth [of EasyJet] should slow down to one or two or three per cent a year rather than more than that. And that has actually increased the profits rather than trying to find more customers.”
Overlap
Stelios said there was not much overlap between Ryanair and EasyJet's routes. He offered this assessment of his Irish rival.
“Ryanair pioneered, and I have to say I didn’t think it would be that big, going to airports in the middle of nowhere. I didn’t know that many people would be interested in flying from an airport in the middle of nowhere to another airport in the middle of nowhere.
“Obviously, flying has a lot of appeal and they managed to build a business on that.
“I think there is room for both companies definitely and there is probably room for two or three flag or legacy carriers.”
When asked if he has ever flown with Ryanair, he said: “I flew Ryanair once before I started EasyJet and not since then. But I fly EasyJet regularly. Plus, I don’t need to go anywhere they fly.”
Stelios said he now spends up to 25 per cent of his time on philanthropic activities.
This includes a project in his native Cyprus following the recent financial bailout of the island that involved deposits being raided by the Government.
“In reality, what happened was quite outrageous,” he said. “And the world has forgotten about it.
“I knew that would create a very big problem in Cyprus so I started a very simple programme of handing out a daily snack to people in Cyprus who were in need. We are now trying to expand it.
“Because I felt almost guilty that I’m enjoying myself in places like this [Monaco] and people in Cyprus are suffering, I said I have to do something to give back in a very down-to-earth and tangible way.”
He has also supported financially about 20 projects that involve both Greek and Turkish businesspeople on Cyprus.
“I subsidise Greek and Turkish entrepreneurs to do business together,” he said. “We have a duty to give back. It’s not an option.”
Fastjet
Stelios is also a small investor in Tanzania-based Fastjet, which is seeking to become the first pan-African airline seeking to offer low cost flights.
He said Africa was the "final frontier" for budget airlines given that low cost flights are available in most other continents.
“Africa is a difficult place to do business,” he said. “There is no open skies. It’s like trying to invest in Europe in the 1980s. Is this the right time in Africa? Should we wait five years? Who knows.
“For me, it’s a low risk opportunity for a venture that might be pioneering.
“We’ll see what happens, but it’s risky.”
